15 Tips for a Successful Mediation
By: David P. Hathaway
Civil lawsuits are most often resolved by a mediated settlement agreement, which could have an infinite variety of settlement numbers and terms. What result a party achieves, after months or even years of litigation, is in large part a function of what happens on the day of mediation. Mediation is therefore the most important day of the case. Ironically, most lawyers go through law school and their legal practice with no formal education or training on how to represent a party at mediation. They just watch others, whether good or bad, and learn the ropes over time. However, mediation is far too important to learn by trial and error, because it is the day where all the fruits of a lawyer’s labor are put to the test. Therefore, this article is meant to provide lawyers of all experience levels with some practical pointers on how to succeed at mediation and thereby better serve their clients and improve judicial economy as a whole.
Tip #1: Expect a Competitive Negotiation. Mediation is not a cooperative negotiation process. There are books about cooperative negotiation where both sides show all their cards and reach a “win-win” result. For example, if you had one orange and two people wanted it, rather than slicing it in half, both parties could come to the table and explain why they wanted the orange. It might be that one party intended to squeeze the juice and the other person wanted to use the rind for a cake. By sharing this information, the parties realize they don’t have to cut the orange in half, and can both get everything they wanted. This requires trust and honesty, and quite a bit of luck. By contrast, civil litigation is often about money, and therefore it is a zero sum game. That is to say, $100 out of your pocket will become $100 in my pocket, and the sum is zero. If one lawyer attempts a cooperative approach in mediation, he or she should not expect the other side to do the same. A competitive negotiator will clean the clock of a cooperative one. For example, if a cooperative negotiator explains that his client really needs only $1,500 per month to cover the remainder of the lease payments, the competitive negotiator might never offer a lump sum payment. For purposes of mediation, expect the negotiations to be competitive, not cooperative.
Tip #2: Don’t Drop Anchors. Negotiation begins long before mediation. An anchor is a number mentioned at some time in the lawsuit that the other side will no doubt remember many months later. Any number will sound like an offer, even if it is not. Attorneys may try to use qualifying language, like “my client might go to $100,000” or “I doubt he would go to $100,000,” but qualifiers fall on deaf ears. All the other lawyer hears is a possible settlement number, or an “anchor,” of $100,000, which has a powerful effect on where the case ultimately settles. In one study, lawyers were asked to value a rare jewel for auction, and were given information about its condition, rarity, age, maker, and comparable sales. They were handed a detailed questionnaire, which asked at the end, “Do you believe the value at auction exceeds $2,500?” There was a blank line for the attorney to give his or her best estimate of value, and the average number given was $1,800. Other lawyers were given the very same questionnaire but instead, at the end, it asked whether the value would exceed $5,000 at auction. The average estimate given on these forms was $4,200. The anchor, therefore, made huge impact on the lawyer’s valuation. If opposing counsel asks what your client might take, you may not want to give a number. For the plaintiff, you might indicate, “he is looking to recover the whole amount” or, for the defense, state “we are not looking to pay anything at all.” Of course, if you serve a proposal for settlement under Fla. R. Civ. P. 1.442, you will have to weigh the potential fee-shifting benefit of offering a settlement number with the drawback of dropping an anchor. Since the vast majority of cases are resolved in settlement rather than by court adjudication, which where fee-shifting might occur, avoiding the anchor may be the weightier consideration.
Tip #3: Skip the Phone Debates. Just like dropping anchors, try not to engage in telephone debates with opposing counsel that reveal all your mental impressions about the case. If you concede one part of your case is weaker than others, you will have lost the force of those arguments at mediation. The same goes for those conversations in the courthouse before a hearing. There is obviously some merit to “feeling out the other side” and determining whether the lawsuit can be resolved earlier rather than later, but be careful of what information you share. Sometimes it is easiest to indicate that your position has already been stated in the pleadings. There was a scene in The Godfather where Sonny Corleone starts openly questioning a rival mob family’s proposal during a meeting with his father, and afterward, Don Vito Corleone tells his son never to let anyone outside the family know what he’s thinking. The same can be true in civil litigation, both in sharing thoughts about the case and even in proposing mediation. If your client wants to go to mediation, be careful how you communicate it to the other side, because sometimes it can be perceived as a sign of weakness. Some lawyers even confirm in writing that it was the other attorney who suggested mediation. In Florida, mediation is required before trial, but remember not to mediate too early, before the parties have bled enough, or too late, when the parties end up fighting mostly over the legal fees. In your communications with opposing counsel regarding the merits of the case or the prospects for mediation, less is more.
Tip #4: Guard Against Overconfidence. Studies show that lawyers are overly optimistic about both their chance of winning and the damages recoverable. In one study, lawyers were asked to pretend they were a sports agent for a starting pitcher in Major League Baseball negotiating against his team. The agent’s last offer for the pitcher’s contract was $6.75M and the team’s last offer was $4.25M. The average contract for a pitcher with your client’s win-loss percentage was $5.375M. In a process called “baseball arbitration,” each side submits a confidential proposed outcome and the arbitrator can choose only one side or the other; he has no other option. In this hypothetical, the lawyer submits a number and is asked to give a percent likelihood that the arbitrator will choose his number rather than the team’s number. In filling out the questionnaire, lawyers on average were 78.5% confident that their number would be selected. In actuality, anything over 50% is wishful thinking. Even very experienced lawyers make this mistake. Anything can happen at trial, and because a strong case on the merits could fail for some reason no one considered, your best estimate for success should be around 50%. Also keep in mind that experience may boost confidence, but it does not necessarily improve ability. Some lawyers have been making the same mistakes for 30 years of practice, and one of those mistakes is being overly confident of an outcome at trial.
Tip #5: Make a True Case Valuation. A true valuation of a case is the present value of a future outcome. If you represent a plaintiff who can potentially establish $1M in damages, it would be inaccurate to simply conclude that the case is worth $500,000 because each side has a 50% chance to win at trial. One reason is that parties fail to consider the recovery may be $1M or much less. If you made a bar chart, starting at zero and ending at $1M, you might see a peak in the middle, where a recovery of $500,000 is more likely than a recovery of $250,000 or $750,000. To make an accurate valuation of a case, you should first estimate the likelihood of recovering different amounts if you won the case (for example, 30% at $1M, 40% at $500k, and 30% at $250k). As stated above, guard against overconfidence. Take the average, and then multiply by chance of actually winning the case (say, 50%). Finally, deduct the anticipated future litigation expenses including legal fees and costs from the date of mediation through trial (say, $75,000). You will find that your $1M case is more accurately worth around $175,000, not $500,000. Never lowball the fees and costs, and be sure both the lawyer and client have previously discussed the anticipated future legal expenses; it should not come as a shock to the client on the date of mediation. Also remember the value of a case may change significantly over time. New testimony and court rulings can substantially affect all three variables – your estimate of the recovery percentages, the chances of winning on liability, and the legal expenses required to get through trial. The value to use at mediation is the value of the case on that day.
Tip #6: Draft a Good Mediation Summary. Lawyers should be sure their written mediation statement is neutral, has the right information, and is not overly long or technical. For example, you probably do not have to attach every will and trust that a decedent ever executed. However, if there is one paragraph of a contract whose interpretation is central to the case, you should attach the actual page from the contract and not try to paraphrase. It can be comical for a mediator to read, “the contract is clear and unambiguous” followed by three paragraphs of detailed interpretation. The mediator is going to read both summaries for probably an hour or two the night before mediation, so use your space wisely. The mediation statement should include the key facts, claims and defenses, and the status of discovery. It should comment on expert witnesses, dispositive motions, related litigation, prior litigation between the parties, prior negotiations (i.e., anchors), offers of judgment or proposals for settlement, fee shifting issues, and who is coming to mediation. Fee shifting changes a perspective of the risk. A mediation statement generally would not be confidential, particularly if it attaches filed pleadings, so you may want to ask the mediator to keep it confidential. See Fla. Stat. § 44.405 regarding confidentiality. In fact, some attorneys prepare a second summary containing only the confidential information. If you need the mediator to know that he or she will have to calm someone down from the start, feel free to call the mediator the night before. Also, prior to mediation, consider whether you have any ethical issues in dealing with multiple individuals. For example, if you represent three sisters against their brother, they may disagree on how to judicially reform a will or trust. The same goes for individual shareholders in closely held corporations, or where a corporation is paying to defend an employee as in a non-compete case. Get waivers under Rule 4.1-7 of the Rules of Professional Conduct, or have the clients agree in advance as to precise percentages or formulas for sharing a recovery before the money becomes available. You might even have to consider whether the lawyer could be a witness under Rule 4-3.7, such as where the lawyer has performed the pre-suit investigation, or drafted a challenged will or trust. You need to flesh out these issues before you get to mediation, include them in the mediation summary, and perhaps even call the Florida Bar ethics hotline (800-235-8619) with any questions before you attend.
Tip #7: Set Bargaining Points. The day before mediation, lawyers should make a chart with a starting point, target point, and reserve point. Make sure you know what your fees and costs are to date. In the illustration above where the case was valued at $175,000, your starting point could be $1M, your target might be $300,000, and your reserve may be $175,000. A central goal at mediation will be to make the other side think your target point is actually your reserve point. A positive bargaining zone is where the plaintiff’s reserve overlaps with the defendant’s reserve (for example, the least the plaintiff would take is $175,000 and the most the defendant would pay is $250,000). Unfortunately, this does not happen often. Usually there is a negative bargaining zone, and if it is large, the case probably will not settle. If the bargaining zone deficit is small, the parties will have to decide whether a small movement from the reserve is better than continuing with litigation. When you get to mediation, you might question whether you have really pulled the other side down to its reserve, but only the mediator knows. If you believe the other side can do better, your pre-mediation bargaining points should be your cue to walk away. In simplest terms, the question of when to walk away is whether the outcome of mediation would be worse than continuing to litigate. On the television show “Pawn Stars,” the employees at a high-end pawn shop in Las Vegas are experienced negotiators who stick to their final number, leaving plenty of room for profit, even when the customers ask for more. Although more than half of the deals fall through, the owners have a successful operation because they stick to their bargaining points. In fact, the employees keep track of their profit percentages and rank themselves from top to bottom as negotiators at the store. Likewise at mediation, it is wise to set your bargaining points the day before and be willing to walk away if the other side expects you to go beyond your reserve.
Tip #8: Make a Good Opening Statement. At the start of mediation, your opening statement should be persuasive but should not cross the line to offensive. If the delivery is so caustic that even the mediator is uncomfortable, the lawyer needs to tone it down. Lawyers should stick to the facts of the case and not speak to the relative experience or abilities of counsel. If an expert witness is going to offer remarks in the opening statement, he or she should present like a college professor, not an adversarial blowhard. Lawyers sometimes miss the mark when it comes to good communication at the opening of mediation. Often plaintiffs’ counsel, after giving their opening statement, spend the rest of the time in the joint conference before caucus thinking about a possible rebuttal, when they should be listening closely to the other side. The expression “we are here in good faith” has become such a cliché that it now means very little. The mediator will probably be looking at how the opposing parties react when a lawyer makes his or her statement. Normally a lawyer’s client will love it, but the mediator may look to see if the other party is fidgeting or passing notes. The audience for your opening statement is the decision maker on the other side, not the mediator. The best statements are informal and are directed to the opposing decision maker, as “the one chance I have to speak to you informally.” It is acceptable to involve your clients to say something if they wish, as long as you believe it will be productive. There is no need to repeat the same legal arguments that the other side has heard 10 times before. The best statements include a new “thunderbolt” and use it as the opening act of the negotiation. Pictures can be effective. Be sure never to threaten an adverse party of criminal penalties, as that probably would be a second degree felony under Fla. Stat. § 836.05. A defense lawyer needs to respond to the plaintiff’s statement with more than just a brief, “we disagree,” because otherwise it creates an imbalance. The opening statement should be longer if the mediation is early in the case, and shorter if the mediation is later in the case. Even though the opening statement may be long forgotten at the end of the day, it is very important to setting the negotiations on the right track.
Tip #9: Start the Negotiation Properly. People who ask for more generally get more, but you should also heed the expression, “pigs get fat; hogs get slaughtered” (i.e., asking for a big number can be rewarding, but demanding an outrageous sum can kill the negotiations before they start). At some point in the case the plaintiff has probably already demanded all amounts potentially recoverable. At mediation, it does not help to ask for more than your best case at trial, but it may be wise to start with your best case. You should then move slowly off that number, adapting to new information and making the smallest concessions possible while still keeping the other side in the game. If they shut down, you failed. It may be helpful to give a rationale for the starting number, and possibly for the number after that, but over time, it often becomes unproductive to give a rationale. Just submit a number and don’t explain it, because truly it reflects nothing more than a negotiated compromise. Take your time and use strategies to make the opposing side think you are nearing your bottom-line reserve when actually you are nearing your target. The lawyer who “gets it” is the one who asks the mediator how many times the offers will go back and forth, because you need to save room to make final concessions at the end. A lawyer should keep a chart of the plaintiff’s demands, the defendant’s offers, and the midpoint, and watch that midpoint to be sure it is going in the right direction. If you start slowing down (say, from $100,000 to $90,000 to $85,000 to $82,500) you are reinforcing a message and signaling where you will end. Signal early that you cannot move much, but break the bad news slowly because that way it is easier to digest. A quick illustration of breaking bad news slowly: If you house-sit for your neighbor, and the cat dies, your first sentence when they return home should not be that the cat died. You might explain the cat was missing, you saw him on the roof, you took him down safely, he was acting strangely, you took him to the vet, the vet prescribed medicine, the next day he was barely moving, you took him back to the vet, they ran some tests, and later the cat had to be put down. Remember that some negotiations at mediation are between the lawyer and his own client, and these principles also apply in that regard. Never move backward from a prior offer because it is extremely damaging to the process (unless of course you find a “smoking gun” e-mail in the file during mediation or learn that the court entered summary judgment that day). If the other party claims to be broke from the outset of the negotiations, the best you can do is settle for what he can pay based on his representations, and if they turn out to be false, the agreement would be void and immediate judgment entered for the full amount. There is no sense in continuing to litigate if what he says is true, as it would be against your client’s best interest. Rarely will one succeed in getting guarantees from the wife or liens on the house or car. Never take a promissory note from someone who already defaulted on a payment obligation because you have just let the guy escape the lawsuit and return to square one with a new payment obligation that will require enforcement. Mediation is like a game, and the mediator is going to do what you say, whether it is wise or unwise. The goal is never to convince the other side you are right about the case, as opposing counsel literally are paid not to agree. The goal from the start is to convince the other side that your target is really your bottom line and to get the other side to reach or exceed its reserve.
Tip #10: Balance Puffing with Credibility. The law allows puffing about possibilities of settlement or as to what a party might be willing to accept. Rule 4-4.1 of the Rules of Professional Conduct is titled “Truthfulness in statements to others.” The Comment following the Rule states that a lawyer is required to be truthful as to statements of fact, but that
“[u]nder generally accepted conventions in negotiation, certain types of statements ordinarily are not taken as statements of material fact.” It specifies that “[e]stimates of price or value placed on the subject of a transaction and a party’s intentions as to an acceptable settlement of a claim are ordinarily in this category.” The rule basically carves out an exception to the rule against making untruthful statements. Thus, you are ethically allowed to say, “this is a final offer” even if you know it is not, although query whether that is advisable for your client. Some lawyers expect opposing counsel to be puffing at mediation, and expect their adversary to call them out on it. However, do not lose credibility. If you say “final offer” and continue to negotiate, you have cried wolf. Another way to lose credibility is to make an outrageous opening demand and then huge concessions. In one case, a plaintiff’s attorney made an opening demand of $15M and a follow-up demand of $5M. At the end of the day he took only $85,000. As he was walking out of the building, he asked the mediator if he could have done better, and the mediator said, “yes.” Sometimes a lawyer will insist that one point is non-negotiable, and then offer it away later, which hurts credibility. Remember that whether the other side settles depends, at least in part, on whether the other lawyer believes you have moved as far as you will go, and therefore credibility matters. One way to establish credibility is to respond to an unacceptable offer by simply saying, “no.” It is amazing how difficult it is for some lawyers to just say “no.” Some law schools videotape their students saying “no” just to help them study all the nonverbal signals and hesitations that might indicate serious consideration of the offer. If you say you are “about at the end of your rope,” “the train is leaving the station,” or the like, all you are really saying is “there is more money left.” Any phrase or expression that is not a “yes,” is just a “no” with several qualifiers that might give away your mental impressions. Even with the mediator you do not have to be totally frank, such as blurting out your bottom number from the start, but the mediator eventually will need to know how much money there really is left to spend, because an apparent impasse might be avoided. Often if the mediator really needs to know the truth about where things are headed, it will be in a hallway chat. Of course, a lawyer must be careful not to give away client confidences when talking to the mediator in the hallway. See Fla. Stat. § 44.405 regarding the lack of confidentiality for mediation communications offered to prove malpractice (e.g., breach of attorney-client privilege). The bottom line is to observe the principles of puffing while at the same time maintaining credibility during mediation.
Tip #11: Beware the Annoying Negotiator. Some lawyers employ tactics that make mediation maddening. There are a number of examples: the good cop/bad cop (one lawyer walks out in a huff, the other lawyer stays and “reveals” what the client needs, which is actually the target rather than the reserve); the costume jewelry salesman (always adding things of zero value to get you to trade something better); the poor soul (can’t afford anything); the auctioneer (he can get it cheaper elsewhere or he has a buyer who will pay more); the pseudo-cooperator (explaining how it’s a win-win and getting more info from you); the higher authority (I have to check with my wife, and then “she” reduces the offer); the nibbler (sells you the eyeglass frame, plus the prescription, plus the left lens, plus the right lens, plus the case, etc.); the fait accompli (this is our standard deal for every case and there is nothing we can do to change it); the guy with funny money (you can make this tax deductible, or pay in the next budget year, or allocate money toward payroll, or split it five ways, etc.); the red herring dragger (always focuses on a bogus argument); the relationship hostage-taker (“if you valued our friendship you would do this for me and in return I will help you earn business”); the tough guy (“I’ve never lost a case like this in 30 years”); the snail (tries to make the mediation go past midnight); the blowhard (just tells irrelevant stories to distract you all day); the time-bomb (suddenly gets irate at the negotiation process and begins to walk out); the critic (nothing is a good idea and no compromise will ever work); the poor host (turns off the air conditioning and won’t order lunch); the know-it-all (he has a perfect spreadsheet and there is no way to refute his numbers); the one-track mind (refuses to consider other issues until the parties will agree to one thing, like nailing down the date of an employee’s termination). So, how do you deal with these people? Just like with bullying in school, people only mess with you if it works. Ignore them. If that does not work, get away from negotiating and talk directly about their behavior and how the process needs to change. Always have a suggestion on how to proceed in a more constructive way. If they still don’t change, you may have to confront them and retaliate (i.e., if you continue to do this, then we will make our next offer good for only 10 minutes). But remember, your definition of difficult behavior may say more about you then it does about them. Try not to wish the other person was different. Instead, just do your job and stay the course.
Tip #12: Making Progress at the End of the Day. There are a few tricks to reaching a settlement at the end of the day. One is to dump “the rest of the money” and impart a sense of urgency. It is a tactic geared to convincing the other side it is the best you can do. Another option is to “split the baby” and meet in the middle, which might work if you are very close, but never do it too early, because as soon as you make the suggestion, you just told the other side you would go as far as that middle number. The same is true for a “would ya, could ya,” meaning if you go to this number, I will go to that number. These are sometimes called “brackets.” Similarly, if you offer a lump sum initial payment at any time, there is no way to pull it back. For settlements involving a number of payments, always negotiate the lump sum first and then get to the monthly installments. If the other side stops, do not “bid against yourself” by moving twice without any movement by the other side. However, simply opening the negotiations with a number is almost never “bidding against yourself” because chances are it will not be even in the ballpark of what the other side would accept. Plaintiffs usually should expect to go first with an opening demand. If the other side plays hard-ball and makes miniscule concessions, you should punish bad behavior by doing whatever they do, and relaying a specific message through the mediator that “our last move is a response to what came from you.” Likewise, you should reward good behavior. Don’t get into percentages, because they mean nothing. You could come down 5% ($100,000 to $95,000) and they could go up 100% ($5,000 to $10,000) and both sides only moved $5,000. You should have an end game plan, meaning a way to give the other side a small victory to entice them to close the deal. It is very important psychologically. For example, you might offer to pay the entire mediator’s fee. Typically it is not a good idea to have the parties get together to talk “man to man” to close a deal, because the weaker one might cave in without his lawyer present, or their tempers could destroy all the progress of the mediation thus far. If the other side offers non-monetary terms, do not try to negotiate the monetary amount at the same time, because it is the non-monetary terms that will help you value the money component, and some of them can be quite valuable if you fully understand what is being offered. Be careful of clients who try to negotiate your fees just to make the settlement work, or clients who ask your opinion about whether to accept a final offer and then accuse you of a bias, particularly in a contingency fee case. If it looks like the parties are just too far apart, rather than declaring an impasse, the parties might agree to settle part of case. In any event, you should have a game plan so that you can make progress at the end of the day.
Tip #13: Knowing When to Pass the Reserve. As mentioned previously, a party should come to mediation with a starting number, a target point, and a reserve (the lowest number to accept or the highest amount to pay). Because there is a negative bargaining zone in most mediations, at the end of the day a party is going to be forced either to walk away, or to go past the reserve. People go past their reserve all the time because most cases settle at mediation despite a negative bargaining zone, but this is not an easy decision. To help your client decide, consider his or her risk tolerance. Some clients hear their chance to win is less than 50% and are seriously frightened, whereas others are inspired for the challenge (remember the famous line by Jim Carrey in Dumb & Dumber: “So you’re saying there’s a chance!”) Some have a stomach for driving a hard bargain and others do not. In fact, bargaining is much more prevalent in some parts of the world than others: according to one source, 75% of Americans pay the fixed price for goods without negotiating, whereas in Israel, only 11% pay the fixed price. Some clients have an immediate financial need for the settlement and others do not. Some clients need mediation more for venting than for money. Also consider the relationship between the person in attendance and the money. Is it their money, are they acting in a fiduciary capacity, or is this public money? Is it the culprit sitting in the next room, or is it the president of the company who has to answer to the board of directors? If you have a married couple in the room and it’s the husband’s case, the wife may want to settle, but if it’s the wife’s case, the husband may want to keep fighting. You might even have other factors at play, such as an impending sale of the company where the prospective buyer has instructed the seller to settle the lawsuit prior to closing, no matter what the number. Remember that under Fla. R. Civ. P. 1.720 as amended effective January 1, 2012, a party must have a representative attend mediation with full authority to settle “without further consultation,” although you probably would never know if the person in the other room was making phone calls to consult with others. Phone calls actually can be helpful, to the extent the caller is obtaining a higher settlement limit, but they can also be harmful, as people on the other end of a phone may be less inclined to compromise because they have not endured the difficulty of the bargaining process which itself is part of what gets cases settled. Also consider whether these parties will ever see each other again and, if they are going to remain in the same industry, how future business will go. By the end of the day the plaintiff should be well equipped to decide whether to settle for a bit less, or for the defense, whether to pay slightly more, than what the case is arguably worth.
Tip #14: Take Your Time With Settlement Agreements. The worst mistakes at mediation involve settlement agreements. A risk manager once said that legal representation is like an airline flight: the takeoff and landing are the most dangerous. If the conflict check and engagement letter are part of your takeoff, the settlement agreement and disengagement letter are part of your landing. Be absolutely sure of the wording of the settlement agreement, because what appear to be minor issues can have major effects. There was a story once where a lawyer representing the State of Florida agreed that all amounts collected as of a particular date would remain property of the State. Later, it was determined that although the State had been billing prior to that date, nothing had yet been collected, so the State inadvertently settled for nothing. Another time, where the liability to make installment payments was only for the corporation, and not the individual officers and directors who had been joined in the suit, the young defense attorney drafting the settlement late at night wrote, “Defendants shall pay …” which included the individuals. For every settlement agreement, be sure to consider what terms apply to which parties to the case, and consider requesting releases even for client-related persons who are not parties. In one case, a plaintiff settled a case against his business partner who had allegedly been paying kickbacks with corporate funds to vendors who were personally close with him, and then the plaintiff immediately sued the vendors to collect the same amounts that had already been settled by the business partner. Consider whether releases should be general or limited, and try to do some thinking in advance so you are not pondering these issues for the first time a 11 p.m. on the day of mediation. Ask yourself whether the parties should stipulate that the settlement agreement is confidential, because whereas generally the conversations at mediation are confidential, the agreement itself is not. See Fla. Stat. § 44.405. Ancillary documents may be necessary to effect the agreement, such as stock transfers and collateral. Be very careful of settlements involving the transfer of real property because the issues can be very complex with regard to title searches, unpaid assessments or dues, preparation of deeds in other states or foreign countries, how the transaction will be treated by the IRS, land valuation concerns, exchange rate of foreign currency, hiring out of state law firms to prepare transfer instruments, metes and bounds questions, outstanding tax certificates, payment for appraisals and closing costs, unforeseen encumbrances or environmental issues, possible renters, dealing with possession after settlement but prior to conveyance, the timing of the closing, and many other issues that often cannot be adequately addressed at a mediation conference. Under Rule 4-5.6(b) of the Rules of Professional Conduct, a settlement cannot include any promise not to represent a related party in the future. Non-disparagement clauses can be very risky. One woman settled a case for $10 million and later gave a television interview about the “f–ing dufuses who fired me.” She instantly became a defendant in a $10 million breach of contract suit. If at all possible, you should never agree to a concept in principle and then draft the contract later; it has to be signed at mediation or else the parties may change their mind after the stress of the mediation has worn off. Mediation works in part because of the difficulty of the process, but even though everyone may be tired after a long day, it is crucial to take your time with the settlement agreement.
Tip #15: Keep Mediation in Perspective. As a lawyer, your job is to obtain the best possible outcome for your client under the facts and law, within the rules of professionalism. You should strive to “own the facts” and recognize that the devil is in the detail. The better you know the case, the better chance you have to resolve it favorably for your client. Your goal is to win, but truth be told, your job is not to win. In fact, it is often best not to keep score of how many times you feel your client “won” or “lost.” There are many factors that contribute to the outcome of a case that we cannot control. It is important to keep the client’s expectations reasonable, if possible. Mediators often say that the sign of a good mediation is where both sides walk away grudgingly satisfied or even somewhat dissatisfied with the result, but relieved that the case is over. Clients who think lawyers want cases to continue so they can keep billing hours are wrong. Lawyers are always representing their clients’ best interests, not their own, and no one can deny that the stress and time commitment in a case multiplies after mediation fails and the parties begin preparing for trial. Lawyers also need to keep their own expectations in check. Some lawyers strike a bargain at mediation and feel proud that they did the best they could, whereas others are always disappointed that they were denied the feeling of a complete victory (sometimes called a “winner’s curse”). Mediation is not a perfect science, and neither side will know if they could have done better unless the mediator tells them. Keep in mind that the most a lawyer can ever reasonably expect to do at mediation is to pull the other party to its reserve number or slightly beyond. If you get your opponent to move 10% off his or her reserve, great. A move of 15% is outstanding. You will probably never get 25%, but the fact is, you really will never know. If you can get the case settled for a number that is acceptable to your client without the risk of trial, you are doing your clients a tremendous service. By keeping mediation in perspective, you will be more apt to reach successful settlements for your clients.
About the Author: David Hathaway is a shareholder in Dean Mead’s Orlando office. He is the Chair of Dean Mead’s Litigation department and the Trust and Estate Litigation Practice Group. He represents corporations and business people to resolve difficult disputes of almost any kind in both state and federal courts. Mr. Hathaway also represents trustees, personal representatives and family members in controversies regarding wills, trusts and estates. In addition, Mr. Hathaway counsels a number of clients in intellectual property matters, frequently helping them apply for federal trademark registrations. He may be reached at email@example.com.